New Policy to Boost Competition in Bangladesh’s Fuel Oil Market

The government has taken an initiative to allow private-sector companies to import refined fuel oil in a bid to ensure an uninterrupted and secure supply of petroleum products in Bangladesh.

As part of the initiative, a draft of the “Policy on Import, Storage, Transportation, Distribution and Marketing of Refined Fuel Oil by the Private Sector, 2026” is being prepared. The Ministry of Power, Energy and Mineral Resources is currently reviewing the draft.

Government officials said growing energy demand means Bangladesh can no longer rely solely on the state-run supply system. The government also aims to utilize private-sector investment and infrastructure to establish a more transparent and competitive fuel market.

Power and Energy Minister Iqbal Hasan Mahmud Tuku said government and private companies operate side by side in fuel markets in many countries. Citing India as an example, he said companies such as Indian Oil and Reliance compete in the same market, giving consumers greater choice.

In Bangladesh, however, fuel prices are currently determined by the government and the Bangladesh Petroleum Corporation (BPC), leaving limited scope for price-based competition among fuel companies. Under the proposed policy, qualified private-sector companies would be allowed to import refined petroleum products.

The minister said the policy is still under review. Once the draft is finalized, it will go through the required government procedures, including approval from the relevant economic and purchase committees. It will then be placed before the Cabinet for final approval before being officially announced. He also urged stakeholders to avoid speculation before the policy is finalized.

According to the Energy Division, the key objectives of the proposed policy are to strengthen Bangladesh’s energy security, ensure uninterrupted supply, increase transparency and competition in the market, and utilize private-sector infrastructure and investment during emergencies or supply disruptions.

Stakeholders from the energy sector will also be consulted before the final policy is prepared.

At present, fuel oil imports and marketing in Bangladesh are largely controlled by the state-owned BPC. With rising demand from industries, transportation and power generation, the government believes that meeting future demand solely through BPC could become increasingly difficult. Recent global and regional conflicts have also highlighted the vulnerabilities of international fuel supply chains.

Questions have also been raised at various times about BPC’s efficiency and management. Industry insiders believe that bringing private companies into the market alongside the government could increase competition and potentially improve efficiency and service quality in the long run.

Energy experts also point to the limited refining capacity of Bangladesh. The country’s major refinery, Eastern Refinery, is relatively old, while efforts to significantly expand its capacity have progressed slower than expected. As a result, more than 75 percent of the country’s refined fuel demand is reportedly met through imports. This increases import dependency and puts additional pressure on foreign exchange reserves.

India, meanwhile, imports comparatively cheaper crude oil, refines it at domestic refineries and meets its own demand while also exporting refined petroleum products.

Experts believe Bangladesh could similarly benefit if major private investors establish modern refineries in the country. The government could provide land, infrastructure and logistical support to facilitate such investments. Public-private partnership (PPP) models could also be considered where appropriate.

However, experts stress that strict eligibility and safety requirements must be imposed before allowing private companies to import fuel. Companies should be assessed on the basis of their jetty or vessel facilities, fuel unloading and storage infrastructure, distribution networks and financial capacity.

Supply security, adequate reserve capacity and fair market competition should also be key considerations in the licensing process.

Energy expert Professor M. Tamim said effective regulation would be the most important factor in opening fuel imports to the private sector. He said private-sector participation should be introduced within an open and competitive market framework, with clearly defined eligibility criteria and regulatory requirements.

Economist Abu Ahmed said Bangladesh’s expanding economy cannot continue to depend on an outdated and monopolistic structure. He argued that the energy sector should gradually move toward public-private participation and a competitive market.

According to him, investment is essential for building an efficient economy, and expanding private-sector participation is necessary to attract that investment. However, the government must remain a strong regulator to ensure that investments are safe, transparent and aligned with public interests.

Overall, allowing private-sector companies to import refined fuel oil could introduce a new dimension to Bangladesh’s fuel supply system. However, simply permitting private imports will not be enough. The success of the initiative will depend on strict standards, transparent licensing, effective regulation, adequate storage capacity and genuine market competition.

At the same time, creating opportunities for major investment in domestic refining capacity could help reduce Bangladesh’s dependence on imported refined fuel and strengthen the country’s long-term energy security.